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Current market conditions in the healthcare services industry are relatively good. While most of the economy is slowly thawing from a deep freeze created by the financial crisis, the healthcare services industry is, with few exceptions, still boiling with activity as demographic trends drive significant growth and consolidation. During the turbulent financial crisis over the last year and a half, the healthcare services industry has performed well by any standard of comparison. Healthcare service companies have remained profitable, continued their strong growth (even adding jobs to an otherwise moribund labor market), and further strengthened the trend towards consolidation through mergers, acquisitions, and recapitalizations. Every segment within the healthcare services industry is experiencing growth and consolidation, although not every segment is at the same point in the valuation cycle. Segments with significant government payers are more challenged by current uncertainties in the regulatory environment than those with an emphasis on private payers. Healthcare service providers (especially homecare providers) should theoretically benefit from healthcare policy reforms that propose to extend and expand coverage. However, current proposals threaten to undermine the ascendance of the homecare industry as the low-cost alternative to more institutional providers. The most important variable in the market for providers who rely on government payers is Medicare. How will potential reforms impact the Medicare program and participating providers? Nursing and equipment providers face entirely different regulatory challenges, but they both are under constant pressure to eliminate fraud and maximize program efficiency on behalf of taxpayers and beneficiaries. Medicare certified home health agencies are fighting against draconian budget cuts that have been proposed recently while durable medical equipment and respiratory therapy providers have been trying to stabilize and recover from the blows dealt to them by competitive bidding, rate cuts, service caps, and now, accreditation requirements. Both industry segments provide essential products and services that are relatively cost effective and that significantly improve the quality of life for beneficiaries. Nevertheless, both need to do a better job of preventing policymakers from reforming the Medicare program to their detriment. Medicare Certified Home Health Durable Medical Equipment/Respiratory Therapy Medicaid Private Duty Medical Staffing Conclusions |